Many Investors Stock Shy Outside U.S.

Irish accountant William Carey does something once a month that sets him apart from the vast majority of his neighbors in County Limerick: he still buys U.S. stocks.

"It's only a hobby," he says, almost apologetically. "With 60 euro a month, you know you're not going to lose your shirt." One euro is worth about one dollar.

Americans were not the only ones tempted into the stock market in the bull years of the late 1990s. To go along with the tech bubble, many parts of Europe and Asia saw big sell-offs of state-owned companies that offered lots of shares and a chance for quick profits _ at least on paper.

More than 15 percent of Germans and almost 10 percent of Japanese own stock. It is still way below the average in the United States, where half of households own some kind of shares. But it has been climbing _ at least until recently.

For the short term, most investors abroad are now shying away from stocks, both U.S. and local. Stock markets in London, Frankfurt, Hong Kong and Tokyo have all slid in tandem with New York.

Some see the bear market's return as confirmation of their traditional aversion to risk.

"Don't mess with things you don't understand," says Masayo Kanai, a 63-year-old landlord in Yokohama, Japan. "Things like stocks go down, so they never work out the way you've planned. … The best thing is to keep your money in the bank."

Those who offer more conservative investments, like banks and real estate brokers, are seeing the same kind of upturn as their peers in the United States

"People are still investing in equities, but when they have spare cash they're putting it the housing market rather than the equity market," said Graham Secker, equity analyst at Morgan Stanley in London.

Mortgage lending in Italy increased 12.65 percent in the year from March 2001 to March 2002, according to the central bank in Rome.

Italians are buying homes for security, said Alessandro Ghisolfi, manager for research at Gabetti, a leading Italian real estate company in Milan.

Those who want even more security are parking their money in government bonds or savings accounts.

"Even if you don't get a great rate of return, at least it's preserved," says Graham Edwards, a Brussels-based investment adviser.

Short-term interest rates in Europe are significantly higher than in the United States, where the U.S. Federal Reserve has slashed interest rates to 40-year lows.

But even in Japan, where interest rates are near zero, Japanese are still hoarding cash.

Most Japanese do not play the stock market, and those who do for the most part invest in Japanese stocks. The equivalent of a 401(k) retirement fund is still relatively new in Japan, and mutual funds are not as popular as they are in other nations.

Institutional investors suffered some losses from Wall Street's decline, but are not announcing any drastic changes in investment strategies.

"We will continue to watch the situation for a while," said Keiji Suzuki, a spokesman of Nichido Fire and Marine Insurance Co. in Tokyo.

Many ordinary investors were adopting the same patient approach.

"We're just seeing some normal movements," said Mccarthy Lee, 27, who works for an ad company in Hong Kong. "It won't affect my confidence for blue chips such as HSBC Holdings and Cheung Kong."

Sten Ankarcrona of Nordea Investment Funds in Stockholm, Sweden, said he had not seen as big a rush from their North American funds as feared.

"The flow has been quite stable," he said.

Edwards notes that for many, there's not much choice.

"People are never happy about taking losses," he says. "But they've equally all accepted that over the long run, the only way they're going to get their money back is to keep it in."

Back in Limerick, Carey concedes the recent market turmoil has only reinforced the conservative streak in the Irish psyche.

Yet he and the others in his investment club still meet once a month, looking for big, solid, old-economy stocks that will recover once the worst is over.

"What's happened in the last three or four weeks has been unprecedented, a huge slide," he says. "But if you buy a quality company, it'll tend to go back up."